A key finance sector adviser to Treasurer Wayne Swan wants young bankers to take a course studying the history of financial crises to help guard against excessive risk-taking.

In his first interview since taking over as chairman of the federal government’s Financial Sector Advisory Council, Paul Binsted said people working in financial markets needed a long-term perspective.

“Just as we’ve discovered we can reduce the accident rate on new drivers by requiring them to take courses and hours of driving, I would very much like to see one or more Australian universities develop a short course on banking history and the history of financial crises that we would make available to young people wanting to pursue careers in banking," Mr Binsted told The Australian Financial Review.

Mr Binsted, whose career in investment banking spanned three decades, said bankers who had worked in crisis periods early in their careers had the experience “seared in their memories" and were cautious about taking risks for the rest of their careers.

“When you have 20 years of good times and all those people with memories of bad times leave, you have a new generation of people who are bright and hard-working but it’s part of human nature that you can get credit bubbles through loose lending," he said.

While the FSAC chairman acknowledged Australia’s financial system was “very robust and strong", he has broached with colleagues and regulators the idea for the course.

The proposed course would not immediately be mandatory for bank executives and directors but he suggested it could be made compulsory in the long term.

Mr Binsted, who acted as a defence adviser against Alan Bond and Christopher Skase in the 1980s, said people working in financial markets needed a long-term perspective. However, Mr Binsted emphasised the views were his own and not necessarily those of FSAC.

Related Quotes

Company Profile

FSAC advises the Treasurer on policies to maintain an efficient and competitive financial sector and gives real-time information on the state of financial markets.

Mr Binsted took over as chairman of FSAC last December, following the retirement of former Macquarie Bank head Richard Shepherd. Members are drawn from the private sector and current board members include National Australia Bank chief Cameron Clyne, AMP boss Craig Dunn, Australian Securities Exchange head Elmer Funke-Kupper, QBE Insurance chair Belinda Hutchison, Insurance Australia Group chief Mike Wilkins, Yellow Brick Road chairman Mark Bouris and AustralianSuper chief Ian Silk.

Mr Binsted is an avid student of economic history and reader of books such as Carmen Reinhart and Kenneth Rogoff’s This Time is Different: Eight Centuries of Financial Folly and Dan Reingold’s Recollections of a Wall Street Analyst. He argues history showed that banking crises were not uncommon throughout the world.

The global financial crisis was partly caused by irresponsible lending and trading practices by American and European bankers.

On contemporary financial services issues, Mr Binsted said the development of a domestic corporate bond market was important and expressed a wish for state stamp duties on insurance to be abolished to help address under insurance in the community.

Mr Binsted’s three-decade career in corporate advisory includes stints in Australia at Lloyds, Schroeders, and County NatWest which was ultimately taken over by Citigroup. In 2004, he helped set up Lazard’s corporate finance business, which is now run by John Wylie. Mr Binsted’s career highlights include working as a defence adviser in the 1980s at Lloyds for Grace Brothers and Arnott’s which Mr Bond tried to take over. He also advised AWA when Mr Skase (now deceased) made a hostile bid. Mr Binsted said the colourful businessmen had a “whatever it takes" attitude.